Looming Sanctions Whack Russian Markets

Notes/Observations

• US said to unveil more Russian sanctions and include institutions from trading new Russian debt (aka the ‘nuclear option).
• Focus on key US data releases including Mar Retail Sales.

Asia:

• Australia Apr Consumer Inflation Expectation: 3.2% v 4.1% prior.
• Australia Mar Employment Change: +70.7K v +35.0Ke; Unemployment Rate: 5.6% v 5.7%e.
• Bank of Korea (BoK) left 7-Day Repo Rate unchanged at 0.50% (as expected).
• BOJ quarterly Regional Economic Report (Sakura) downgraded assessment of 2 of 9 regions [Hokkaido and Tohoku].

Coronavirus:

• Total global cases 138.1M (+0.6% d/d); total deaths: 2.97M (+0.5% d/d).

Europe:

• ECB’s Schnabel (Germany) stated that she saw short term but not sustained inflation rise.
• German Leading Economic Institutes said to cut 2021 GDP growth forecast from 4.7% to 3.7%.
• Ukraine Defense Min Taran: stated that Crimea’s infrastructure was being prepared by Russia for potentially storing nuclear weapons.

Americas:

• White House Press Sec Psaki stated that President Biden had a constructive call with Russia Pres Putin yesterday. Biden stressed to Putin there will be consequences to Russia’s activities.
• US to sanction Russia on election inference would affect 12 individuals and 20 entities.
• US Executive order on Russia sanctions to extend prohibition on banks trading Russian Govt Debt, the order would prohibit US financial institutions from buying new bonds from the Russia Central Bank and Finance Ministry.
• Fed Beige Book noted that economic activity accelerated to a modest pace from late February into early April. Prices had accelerated slight since last report. Employment growth picked up over the reporting period with most districts noting modest to moderate increases in headcounts.
• Fed Chair Powell stated that most Fed officials did not see raising rates until 2024, market should focus on outcomes not dot plot.

Speakers/Fixed income/FX/Commodities/Erratum

Equities

• Indices [Stoxx600 +0.32% at 437.98, FTSE +0.44% at 6,970.25 , DAX +0.32% at 15,257.60 , CAC-40 +0.31% at 6,227.92 , IBEX-35 +0.18% at 8,605.00 , FTSE MIB +0.12% at 24,604.50 , SMI +0.28% at 11,188.78 , S&P 500 Futures +0.46%].
• Market Focal Points/Key Themes: European indices open higher across the board and advanced into the green as the session progressed (with PSI notable exception); sectors among those leading to the upside include materials and industrials; telecom and financials sectors among the laggards; German Constitutional Court strikes down ban on raising rent in Berlin; reportedly OTP looking to buy Nova KBM from Apollo;earnings expected in the upcoming US session include United Health, Pepsico, Bank of America and Dow Chemical.

Equities

• Consumer discretionary: Entain [INT.UK] +2% (trading update), Publicis [PUB.FR] +3% (sales), Travis Perkins [TPK.UK] +3% (trading update), Deliveroo [ROO.UK] -1% (trading update).
• Financials: Sbanken [SBANK.NO] +29% (offer).
• Industrials: ABB [ABBN.CH] +3% (sales).

Speakers

• BOE Q2 Bank Liabilities and Credit Conditions Surveys noted that lenders expected the availability of secured credit to increase over the next three months to end-May. Total funding volumes were expected to increase in the three months to end-May (Q2).
• German Fin Min Scholz reiterated stance that govt must support businesses and households until the pandemic was over. Country could afford to finance all spending that was needed and stressed that Germany would be better off compared to other countries after the crisis.
• German Leading Economic Institutes confirmed it cut its 2021 GDP growth forecast from 4.7% to 3.7% (as speculated). Raised 2022 GDP growth forecast from 2.7% to 3.9%. Cautioned that further delays in vaccine deliveries and virus mutations were the biggest downside risks.
• Poland Central Bank member Kochalski stated that was unlikely it would need a rate hike through 2022.
• BOJ said to be considering raising its overall economic assessment. BOJ said to see signs conditions had improved more than earlier expected. Saw a strong recovery in the US and China as a driving force for its exports.
• South Korea President Moon stated that it would maintain an expansionary fiscal policy stance; To prepare various steps to support chip industry.
• Japan govt said to expand virus measures to 4 additional prefectures.
• Iran President Rouhani reiterated stance that country was not pursing a nuclear weapon.

Currencies/Fixed Income

• USD remained on soft footing as Treasury yields continues to drift away from recent cycle-high levels. Fed Chair Powell stated that most Fed officials did not see raising rates until 2024 and the greenback took its cue from the comments. Dealers focusing on US macro data. Markets betting that good US data would help boost risk appetite thus possibly dragging down the USD.
• EUR/USD hovering just below the key 1.20 level for the 2nd straight session and hitting fresh one-month highs .
• Russian Ruble and bond yields were volatile as US was said to be prepared to unveil more Russian sanctions and include institutions from trading new Russian debt (aka the ‘nuclear option). USD/RUB moved higher by 2% to test 77.50 area while the 10-year OFZ bond yield surged higher.

Economic data

• (FI) Finland Feb Final Retail Sales Volume Y/Y: 4.7% v 2.8% prelim.
• (FI) Finland Feb GDP Indicator Y/Y: -0.6% v -1.3% prior.
• (DE) Germany Mar Final CPI M/M: 0.5% v 0.5%e; Y/Y: 1.7% v 1.7%e.
• (DE) Germany Mar Final CPI EU Harmonized M/M: 0.5% v 0.5%e; Y/Y: 2.0% v 2.0%e.
• (NO) Norway Mar Trade Balance (NOK): 25.4B v 23.6B prior.
• (DK) Denmark Mar PPI M/M: 0.7% v 1.4% prior; Y/Y 5.8% v 3.1% prior.
• (IN) India Mar Wholesale Prices (WPI) Y/Y: 7.4% v 6.2%e.
• (FR) France Mar Final CPI M/M: 0.6% v 0.6%e; Y/Y: 1.1% v 1.1%e; CPI (ex-tobacco) Index: 104.89 v 104.87e.
• (FR) France Mar Final CPI EU Harmonized M/M: 0.7% v 0.7%e; Y/Y: % v 1.4%e.
• (NG) Nigeria Mar CPI Y/Y: 18.2% v 17.9%e.
• (ES) Spain Feb Trade Balance: -€1.1B v -€1.8B prior.
• (IT) Italy Mar Final CPI M/M: 0.3% v 0.3% prelim; Y/Y: 0.8% v 0.8% prelim; CPI Index (ex-tobacco): 103.3 v 103.2e.
• (IT) Italy Mar Final CPI EU Harmonized M/M: 1.8% v 1.8% prelim; Y/Y: 0.6% v 0.6% prelim.
• (PL) Poland Mar Final CPI M/M: 1.0% v 1.0% prelim; Y/Y: 3.2% v 3.2% prelim.
• (TR) Turkey Mar Central Gov’t Budget Balance (TRY): 23.8B v 23.2B prior.
• (IT) Italy Feb General Government Debt: €3.644T v €2.607T prior.

Fixed income Issuance

• (IE) Ireland Debt Agency (NTMA) opened its book to sell EUR-denominated 20-year bond via syndicate; guidance seen +14bps to mid-swaps; order book over €23B.
• (SE) Sweden sold total SEK1.25B vs. SEK1.25B indicated in 2027 and 2030 Inflation-linked bonds.
• (IE) Ireland Debt Agency (NTMA) sold €750M vs. €750M indicated in 6-month Bills; Avg Yield: -0.602% v -0.580% prior; Bid-to-cover: 2.3x v 2.5x prior.

Looking Ahead

• (PE) Peru Feb Economic Activity Index (Monthly GDP) Y/Y: No est v -1.0% prior.
• (CO) Colombia Central Bank Economist Survey.
• 05:10 (EU) Daily ECB Liquidity Stats.
• 05:30 (HU) Hungary Debt Agency (AKK) to sell bonds.
• 05:50 (HU) Hungary Central Bank One-Week Deposit Rate Tender.
• 06:00 (IE) Ireland Feb Trade Balance: No est v €6.4B prior.
• 06:00 (IE) Ireland Feb Property Prices M/M: No est v 0.5% prior; Y/Y: No est v 2.6% prior.
• 06:00 (US) Romania to sell RON500M in 4% 2023 Bonds.
• 07:00 (UR) Ukraine Central Bank (NBU) Interest Rate Decision: Expected to raise Key Rate by 50bps to 7.00%.
• 07:00 (BR) Brazil Apr FGV Inflation IGP-10 M/M: No est v 3.0% prior.
• 07:00 (TR) Turkey Central Bank (CBRT) Interest Rate Decision; Expected to leave One-Week Repo Rate unchanged at 19.00%.
• 07:30 (IN) India Mar Trade Balance: -$14.1Be v -$12.6B prior; Exports Y/Y: No est v 0.7% prior; Imports Y/Y: No est v 7.0% prior.
• 08:00 (BR) Brazil Feb IBGE Services Sector Volume Y/Y: -3.5%e v -4.7% prior.
• 08:00 (UK) Daily Baltic Dry Bulk Index.
• 08:30 (US) Mar Advance Retail Sales M/M: +5.8%e v -3.0% prior; Retail Sales (ex-auto) M/M: +5.0%e v -2.7% prior; Retail Sales (ex-auto/gas): +6.4%e v -3.3%e; Retail Sales (Control Group): +7.2%e v -3.5% prior.
• 08:30 (US) Apr Empire Manufacturing: 19.2e v 17.4 prior.
• 08:30 (US) Apr Philadelphia Fed Business Outlook: 40.9e v 51.8 prior.
• 08:30 (US) Initial Jobless Claims: 700Ke v 744K prior; Continuing Claims: 3.70Me v 3.734M prior.
• 08:30 (CA) Canada Feb Manufacturing Sales M/M: No est v 3.1% prior.
• 08:30 (US) Weekly USDA Net Export Sales.
• 09:00 (RU) Russia Gold and Forex Reserve w/e Apr 9th: No est v $574.8B prior.
• 09:00 (CA) Canada Mar Existing Home Sales M/M: No est v 6.6% prior.
• 09:15 (US) Mar Industrial Production M/M: +2.5%e v -2.2% prior; Capacity Utilization: 75.6%e v 73.8% prior; Manufacturing Production: +3.6%e v -3.1% prior.
• 10:00 (US) Feb Business Inventories: 0.5%e v 0.3% prior.
• 10:00 (US) Apr NAHB Housing Market Index: 84e v 82 prior.
• 10:00 (CH) SNB’s Maechler speech: markets, digital transformation.
• 10:30 (US) Weekly EIA Natural Gas Inventories.
• 11:00 (CO) Colombia Feb Manufacturing Production Y/Y: -1.9%e v -1.6% prior.
• 11:00 (CO) Colombia Feb Retail Sales Y/Y: -4.3%e v -6.4% prior.
• 11:00 (PE) Peru Mar Unemployment Rate: No est v 14.5% prior.
• 11:30 (US) Fed’s Bostic to discuss Economic Inequality.
• 11:30 (US) Treasury to sell 4-week and 8-week Bills.
• 12:00 (RU) Russia Mar Industrial Production Y/Y: -0.8%e v -3.7% prior.
• 12:00 (CA) Canada to sell C$6.0B in 0.25% 2023 Bonds.
• 14:00 (US) Fed’s Daly on Financial Stability and Monetary Policy.
• 14:00 (US) New York Fed’s Logan at SIFMA Event.
• 15:00 (AR) Argentina Mar National CPI M/M: 4.2%e v 3.6% prior; Y/Y: 41.8%e v 40.7% prior.
• 15:00 (CO) Colombia Feb Industrial Production Y/Y: No est v -6.4% prior.
• 15:45 (US) Fed Vice Chair Clarida.
• 16:00 (US) Feb Total Net TIC Flows: No est v $106.3B prior; Net Long-term TIC Flows: No est v $90.8B prior.
• 16:00 (US) Fed’s Mester discusses Economic Inclusion.
• 18:30 (NZ) New Zealand Mar Business Manufacturing PMI: No est v 53.4 prior.
• 20:30 (SG) Singapore Mar Non-oil Domestic Exports M/M: -4.0%e v +8.2% prior; Y/Y: 2.6%e v 4.2% prior; Electronic Exports Y/Y: No est v 7.4% prior.
• 21:30 (CN) China Mar New Home Prices M/M: No est v 0.4% prior.
• 22:00 (CN) China Q1 GDP Q/Q: 1.4%e v 2.6% prior; Y/Y: 18.5%e v 6.5% prior; GDP YTD Y/Y: 18.5%e v 2.3% prior.
• 22:00 (CN) China Mar Industrial Production Y/Y: 18.0%e; YTD Y/Y: 26.6%e v 35.1% prior.
• 22:00 (CN) China Mar Retail Sales Y/Y: 28.0%e ; YTD Y/Y: 31.7%e v 33.8% prior.
• 22:00 (CN) China Mar YTD Fixed Urban Assets Y/Y: 26.0%e v 35.0% prior.
• 22:00 (CN) China Mar YTD Property Investment Y/Y: 30.0%e v 38.3% prior.
• 22:00 (CN) China Mar Surveyed Jobless Rate: 5.4%e v 5.5% prior.
• (JP) BOJ Gov Gov Kuroda at branch manager meeting.
• 22:30 (KR) South Korea to sell KRW700B in 50-Year Bonds.
• 23:30 (JP) Japan to sell 3-Month Bills.